Can I Discharge A Debt For Breach of Fiduciary Duty? I Spent The Money That My Mom Left for My Brothers and Sisters; I am the Executor

(question) I was executor over my deceased mom's estate. I needed money, so I spent the money that was in the estate, and didn't distribute it to my brothers and sisters, as the will required. They have now sued me for breach of fiduciary duty. Can I get rid of this debt in bankruptcy?

(answer) Probably Not. Section 523(a)(4) of the Bankruptcy Code says that you cannot discharge in bankruptcy a debt "for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny." Also, the U.S. Supreme Court held in Bullock v. Bankchampaign, N.A. that if you were a fiduciary and either you knew what you did was wrong (intentional or immoral act), or if you were grossly reckless in your conduct, the debt should be denied discharge for defalcation in a fiduciary capacity.

J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization